Well, this is unexpected. The iPhone 4G saga just got a whole lot crazier - dare I say it, a whole lot more ridiculous. Have you ever reported anything like a phone or something similarly small stolen to the police? What was their reaction? Did you ever get the device back? Did they send an army of officers to get your device back? No? Odd. They raided Jason Chen's house, and took four computers and two servers. Update: And thus our true colours reveal. "The raid that San Mateo area cops conducted last week on the house of Gizmodo editor Jason Chen came at the behest of a special multi-agency task force that was commissioned to work with the computer industry to tackle high-tech crimes. And Apple Inc. sits on the task force's steering committee." Update II: According to TechCrunch, the investigation has been put on hold while the DA ponders Gizmodo's shield defence. Update III: Some legal insight from a constitutional law and first amendment expert and a law professor. The gist? The DA has said no one has been charged with anything here, making this just an investigation - however, this makes the search and seizing of material worse. "If the police are literally just gathering information, with no suspect targeted yet, then a subpoena against a journalist would have probably been smarter than a search warranted that resulted in the front door of Chen's home being bashed in."

If I were Apple and I lost a top secret prototype and someone offered to sell it back to me for a measly $10k I would immediately buy it and then contact the police and give them the details they need to locate and arrest the guy I bought it from.

The most important thing from Apple's perspective is that the secrets remain secret. $10k is a drop in the bucket for them and as nice as justice is it certainly won't help their bottom line, whereas not having pics of their prototype on the web certainly would.

No you wouldn't. You would get your lawyer on the phone and make sure that the person on the other line understands that holding property that doesn't belong to them at ransom is theft and they could possibly get law enforcement involved and at the proposed value of the phone by the person trying to sell it to you its a serious crime. That's how you handle that situation and hope the person realizes this. Apple probably thought that no reputable news source would buy such a phone and that the person would have no choice but to return it eventually and Apple could just deny the snapshots of the phone on the internet.

What Gizmodo did was buy a hot phone, proceed to take it apart knowing full well who owned the phone and where it was from and paraded it in front of the world for a couple of days of Ad revenue but possibly a lifetime ban at Apple events. What they should of done is either not have bought the phone in the first place, or take it to Apple personally (they are only 30 minutes away) with a promise of limited exclusivity from Apple once the device was announced. Even if Apple didn't agree to those terms they should of handed it back to them anyway with a wink and a nod letting them know that they got something on them. Apple may have even been appreciative, perhaps instead of showcasing the NYTimes page as Steve is wont to do they could showcase Gizmodo every once in a while.

Apple's #1 priority is containment. If they'd played ball they'd right now be suing the person who sold it back to them... but there wouldn't be any headlines and we wouldn't be talking about it or about what a horrible company they are. The bottom line for Apple is that not making headlines is more important than legal niceties.